Animal ownership boom drives Pets at Home profits, but supply chain costs decline

Bosses said sales hit £319.4m in the 12 weeks to December 30, a 5.8 per cent jump from the same period a year earlier.

Its retail business enjoyed particularly strong growth in the run-up to Christmas, up 9.8 percent, as customers turned to more premium brands to pamper their pets. The company’s veterinary business posted a 4 percent sales increase.

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But the company warned that inflationary pressures weighing on the economy are starting to take hold, with supply chain costs rising.

The Pets at Home chain has been fueled by a surge in demand for pets among Britons since the start of the coronavirus crisis, while its essential status has allowed its stores to remain open during lockdowns.

In a business update, Pets at Home said: “We, like many others, are witnessing a series of inflationary pressures throughout the supply chain. While we are not immune to these challenges, we are proactively mitigating them through a series of planned initiatives.”

The retailer said these include targeting rent reductions, procurement savings and “operational efficiencies”.

Despite cost pressures, bosses are confident underlying pre-tax earnings will beat expectations, coming in at least £140m.

There was strong growth in the Pets at Home VIP loyalty scheme, up 13 per cent year-on-year to seven million members, with more than one in four purchasing in stores and online.

Membership levels for its puppy and kitten club are up 60 percent, with 24,000 new members signing up each week, with bosses noting that members typically spend a third more than non-members across the group.

At the company’s First Opinion veterinary practices, new client registrations hit about 9,200 a week.

Group Chief Executive Peter Pritchard said: “Our unique, omnichannel pet care strategy continues to deliver strong revenue growth, reflecting continued momentum in customer acquisition, engagement and spend as The benefits of our continued investment in capacity and capability are really starting to deliver.”

The boss announced his retirement from the business in November last year; however, there was no update from the company on who will succeed him when he retires in the summer.

The firm added: “The search for his successor is well underway and a further announcement will be made in due course.”

Freetrade analyst Gemma Boothroyd said: “Pets at Home has just delivered a huge chunk of revenue growth for hungry investors to sink their teeth into.

“VIP memberships and veterinary clinics have proven to be a fantastic upsell opportunity for Pets at Home. These services don’t just draw customers to their physical locations, where they’re more likely to browse and spend more.

“They are also exactly how Pets at Home can continue to carve out a niche against Amazon. In-person services will be vital for the retailer as it continues to demonstrate its differentiation from behemoth Bezos.”

Eleonora Dani, an analyst at brokerage Shore Capital, noted: “Pets at Home has provided a strong trading update.

“The UK pet sitting market remains strong, with continued strong growth in new pet-owning customers, and the search for Peter Pritchard’s successor is well under way.”

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Livingston’s veterinary business was sold as part of the £100m Pets At Home deal

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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